The Shift Towards Retail Media: Key Takeaways for Mid-Market and SMB Brands
By Jeff Coleman - Chief Client Officer, BirdDog
Retail media is rapidly becoming the dominant channel for brands aiming to drive growth in eCommerce. As we analyze the latest data from Skai’s Q4 2024 Quarterly Trends Webinar, mid-market and SMB brands must adapt their advertising strategies to remain competitive in 2025.
Retail Media Spend Surges While Search & Social Stagnate
Retail media ad spend surged 23% year-over-year (YoY), highlighting a major budget shift toward this channel. In contrast, search ad spend declined by 2%, while social ad spend increased by a modest 2%, reinforcing the growing dominance of retail media in eCommerce advertising.
This trend is not solely due to rising ad costs but rather a strategic reallocation of ad budgets. Retail media network (RMN) cost-per-click (CPC) rates rose only 3% YoY, indicating that brands are investing in retail media to drive higher volumes, not just to sustain impressions at higher costs. If CPCs had surged, brands would be forced to spend more just to maintain visibility. Instead, the data suggests an intentional pivot towards maximizing return on investment (ROI).
Amazon DSP Leads Retail Media Growth
A standout trend from Q4 2024 was the 44% YoY increase in Amazon DSP spending, nearly doubling the growth rate of RMN ad spend. This underscores the rising importance of programmatic advertising on Amazon, especially for brands aiming to extend reach beyond traditional search-based ads.
Other platforms, including Google and Meta, are expanding their commerce-focused advertising solutions at a similar pace, intensifying competition within the retail media space. This presents brands with more options for omnichannel advertising strategies, enabling them to diversify their approach across multiple platforms.
Increased Efficiency in Amazon Sponsored Products
Amazon's advertising platform has seen notable efficiency improvements. Amazon Sponsored Products conversion rates increased by 13% YoY, far exceeding the 6% YoY increase in CPC rates. This indicates that brands utilizing Amazon’s advanced ad tools and analytics are achieving stronger ROI.
For brands working with agencies, this raises a critical question: Did your agency improve efficiency in Q4? The data shows that Amazon's platform-wide efficiency improved—if your agency failed to capitalize on this, it may be time to reassess your advertising strategy.
Seasonal Trends: The Importance of Early Planning
A key shift in Q4 2024 was the timing of ad spend. October and November saw higher YoY increases in spending than December, suggesting that brands are planning holiday campaigns earlier to capture early demand. Advertisers should start preparing for major shopping events—such as Prime Day, Black Friday, and Cyber Monday—well in advance to maximize returns.
Walmart Sponsored Products: A Cost-Effective Alternative
For brands seeking cost-efficient retail media investments, Walmart Sponsored Products stand out. Their CPC rates are less than half that of Sponsored Brand Ads, yet they occupy similar real estate on the Walmart marketplace. Brands selling on Walmart should consider this ad format as a high-ROI tool for customer acquisition.
Key Takeaways for Mid-Market and SMB Brands
🔹 Retail Media is the Future
With 23% YoY growth, retail media networks are securing a larger share of ad budgets. Brands should prioritize retail media over traditional search and social advertising.
🔹 Amazon DSP is an Essential Growth Tool
Amazon DSP's 44% YoY growth highlights its effectiveness in reaching new audiences. Brands looking to scale should integrate programmatic advertising into their retail media strategy.
🔹 Ad Efficiency is Improving
Amazon Sponsored Products are becoming more effective, with conversion rates rising faster than CPCs. Brands should ensure they’re leveraging Amazon’s evolving ad tools to maximize performance.
🔹 Plan Holiday Campaigns Early
With higher ad spend increases in October and November, advertisers should start planning early for peak shopping seasons.
🔹 Consider Walmart Sponsored Products
For brands selling on Walmart, Sponsored Products remain one of the most cost-effective ways to acquire new customers.
Final Thoughts
The Q4 2024 data makes it clear: Retail media is growing and evolving rapidly. Brands that embrace these changes, adopt data-driven strategies, and plan ahead will be best positioned for success in 2025.
For mid-market and SMB brands, the real question isn’t whether to invest in retail media—but how effectively you do it. Are you maximizing efficiency, leveraging the right platforms, and planning ahead? If not, now is the time to refine your strategy and ensure you stay ahead of the competition.